...Agency Problems and Dividend Policies Around the World Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny* January 1999 Abstract This paper outlines and tests two agency models of dividends. According to the “outcome” model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. According to the “substitute” model, insiders interested in issuing equity in the future choose to pay dividends to establish a reputation for decent treatment of minority shareholders. The first model predicts that stronger minority shareholder rights should be associated with higher dividend payouts; the second model predicts the opposite. Tests on a cross-section of 4,000 companies from 33 countries with different levels of minority shareholder rights support the outcome agency model of dividends. The authors are from Harvard University, Harvard University, Harvard University and University of Chicago, respectively. They are grateful to Alexander Aganin for excellent research assistance, and to Lucian Bebchuk, Mihir Desai, Edward Glaeser, Denis Gromb, Oliver Hart, James Hines, Kose John, James Poterba, Roberta Romano, Raghu Rajan, Lemma Senbet, René Stulz, Daniel Wolfenzohn, Luigi Zingales, and two anonymous referees for helpful comments. 2 The so-called dividend puzzle (Black 1976) has preoccupied the attention of financial economists at least since Modigliani and Miller’s (1958, 1961) seminal work...
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...McDonald’s Corporate Company Profile |About McDonald's: [pic] | |McDonald's is the leading global foodservice retailer with more than 30,000 local restaurants serving 52 million people in more than 100 countries each | |day. More than 70% of McDonald's restaurants worldwide are owned and operated by independent local men and women. | |McDonald's is one of the world's most well-known and valuable brands and holds a leading share in the globally branded quick service restaurant segment of | |the informal eating-out market in virtually every country in which we do business. | | | |Serves the world some of its favorite foods - World Famous French Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin. | | | |[pic] [pic] [pic] | | ...
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...Emerging Markets Review 13 (2012) 516–547 Contents lists available at SciVerse ScienceDirect Emerging Markets Review journal homepage: www.elsevier.com/locate/emr Corporate governance, agency problems and international cross-listings: A defense of the bonding hypothesis☆ G. Andrew Karolyi ⁎ Johnson Graduate School of Management, Cornell University, 348 Sage Hall, Ithaca, NY 14853, USA a r t i c l e i n f o Article history: Received 30 June 2011 Received in revised form 6 August 2012 Accepted 7 August 2012 Available online 17 August 2012 JEL classification: F30 G15 G32 G38 Keywords: Cross-listing Stocks Bonding International financial markets a b s t r a c t Why firms from around the world seek to cross-list their shares on overseas exchanges has intrigued scholars during the past two decades. A general dissatisfaction with the conventional wisdom about investment barriers segmenting global investors and how cross-listings overcome those barriers cleared the way for newer wisdom about informational problems and agency conflicts, and how firms could overcome weaknesses in corporate governance by listing on, and thus “bonding” to, overseas markets with stronger regulatory oversight, stringent reporting and disclosure requirements and investor protections. Critics have challenged the viability of the bonding hypothesis, which I answer in this review. © 2012 Elsevier B.V. All rights reserved. 1. Introduction Cross-listing — also referred...
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...Questions and Applications * Agency Problems of MNCs a) Explain the Agency problem of MNCs R/: It refers to the conflict of interest between the manager and the subsidiary. The manager creates a subsidiary for the purpose of making decisions that increase the expectations of the shareholders, the subsidiary making the decisions for the purpose of increasing their own profits, they have forgotten the purpose of the manager who has to create incentives or compensation to guide the subsidiary and together achieve the goals. b) Why might agency cost be larger for a MNC than for a purely domestic firm? R/: For cost, monitoring, and size. The MNC is larger and incur many more monitoring costs with subsidiaries abroad, it is also more difficult for foreign subsidiaries to follow the same goals as the MNC, and the size generates chaos. * International opportunities Due to the internet. a) What factors cause some firms to become more international than others? R/: As companies take advantage of labor, they can produce their products in other countries at lower prices. The theory of comparative advantage; where countries use the specialization of a product and internationalize that product to meet the needs of other countries. The imperfect cycle theory and the product cycle theory. (a) Offer your opinion on why internet may result in more international business? R/: The internet allows rapid communication between boundaries...
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...Market Solutions to the Agency Problem in Periodic Financial Reporting Edgar Carlos Duarte Aguilar “The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be as dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” Adam Smith Introduction Enron’s bankruptcy in 2001 was a milestone in recent times as far as corporate governance regulations it is concerned. Besides the executives, the external auditors were accused and found guilty as accomplices in distorting the accounting information the Securities and Exchange Commission (SEC) required from them as a public company that traded its securities in the New York Stock Exchange (NYSE). US Government’s reaction was to increase the regulation on the activities performed by all public companies by issuing the Sarbanes-Oxley Act (SOA) and creating the Public Company Accounting Oversight Board (PCAOB). It was now required that the Chief Financial Officer (CFO) of each company signed a statement on the effectiveness of the Company’s internal control and that the external auditors issued a report on this management’s statement, besides their previously required report on the fair presentation of its financial statements....
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...THE EFFECT OF AGENCY PROBLEMS IN VALUE MAXIMIZATION Siti Balkish Roslan ZP01796 Financial Management 2/2013 According to HBS Professor Michal C. Jensen, many managers are caught in between the desire to maximize the value of their companies and the demands of “stakeholder theory” to take into account the interests of all the stakeholders in a firm. It is already agency problems arise within a firm whenever managers incentives to pursue own interests at the shareholder expense. This is common knowledge in the business world. There have also been devises and mechanisms that have been created to reduce these problems such as managerial shareholdings, concentrated shareholdings by institutions or by block holders, which can increase managerial monitoring and with that improve performance. The use of debt financing can improve performance by inducing monitoring by lenders as well. The labor markets for managers are motivation for managers to attend to their reputations among prospective employers and in improving their performance. The threat of displacement imposed by the market for corporate control can create a powerful discipline on poor performing managers. (Anup Agrawal and Charles Knoeber, 2001) These are some of the known and common incentives. Professor Michael C. Jenson wrote that “The way out of the conflict, lies in a new way of measuring value.” "At the economy wide or social level," he continues, "the issue is the following: If we could dictate the criterion...
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...years federal and state agencies have begun to encourage the use of concept papers as a way for applicants to obtain informal feedback on their ideas and projects prior to preparing a proposal. Some of these agencies now require a concept paper be submitted as part of the formal submission process. The purpose of a concept paper, from the funding agency’s point of view, is to help applicants develop more competitive proposals and to save time by eliminating proposals that are not likely to be funded. The applicant’s purpose in developing a concept paper is to capture the interest of the funding agency and demonstrate that the idea they are proposing is worthy of further consideration. Therefore, the first sentences of a concept paper are very important. You want the funding agency representatives or board members to continue reading! The first section (Introduction) should include some information about the funding agency. You need to demonstrate that you have done your homework and understand the mission of the funding agency and the types of projects that they support. Then you need to identify the agency you represent and how the missions of your agency and the funding agency mesh. Describe any partner agencies that will be involved and their interest in the project. Next describe the question, problem or need that needs to be addressed (Purpose). Briefly provide supporting documentation for the importance of addressing this question, problem or need. If you have...
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...clients, and board members should take into account in the human service field. It is important to execute procedures and protocols that address consumers without social partiality in social systems. Contained in this paper, the reader has a impression of how a dream organization or agencies arrange quality service delivery to their consumers. The expression empowerment connects to the English word power. Empowerment permits organizations, agencies, and selected individuals the authority to act for a precise aspiration or purpose (Rapport, 1987). Principles and Empowerment Approach Social service management consists of 12 basic principles that assist human service professional in supporting their clients through the application of the empowerment approach. The essayist will attempt to provide a summary and a concise account of how these approaches affect organizational structuring. First, an effective organization works diligently at designing a structured agency that offers support, provide resources, and encourage client participation. When coordinated processes are in place for consumers, the organization is allowing the consumer the chance to be a part of the decision- making process. Many agencies still introduce and utilize the classical theories approach. However, there is an enduring apprehension that these professionals are only carrying out tasks that he or she is comfortable with instead of what better meets the needs of the client according to Perrow (1986). When granted...
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...considerations: 1. Economic 2. Political 3. Sociological 4. Technological Economic considerations are when the agency knows what is going on in the community around them and what is expected from them. What are other agencies doing and how are they doing them. Political considerations are based on the Board of Directors and how they take care of issues that arise within the agency. Sociological considerations are when the agency is aware of the community and the needs of specifics. It also determines demographics such as gender, age and more. Internal considerations: 1. Organizational purpose 2. Organizational planning 3. Organizational operations 4. Human resources 5. Technological factors 6. Financial resources Organization purposes are the goals that the agency has set and what steps are taken to reach those goals. Organizational planning is when the agency keeps track of the agencies goals and what they have accomplished to reach those goals and accomplishments. Organizational operations are when the agency keeps track of each department and everyone’s requirements and makes sure that the agency is performing and functioning properly. Human resources considerations want information regarding demographics, job training, certifications and more regarding the position, to ensure proper qualifications with the agency. Technological factors ensure that they have all the resources available and up to date such as computers, software,...
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...corresponding page numbers) Abstract Introduction Methods Results Discussion References GUIDELINES in creating the Term Paper: Abstract Short (three-quarters of a page) description of the paper. Describe what the issue or problem is,(in this case, the current issue/problem on PDAF) why it is important or interesting, and your findings. • • • • Introduction What is the issue or problem? Literature review: what is current thinking, findings, and approaches on the problem? What is the significance of the problem? How do you plan to deal with the problem? What is your solution? • Methods How did you search for information or data on the topic? Results What are your findings? What is the impact of the problem to the national economy? • • • • • • • • Discussion Should the PDAF be removed or not? Why? Describe the scenario if it is removed. Describe the scenario if it is not removed. Make a comparison. How can the PDAF be allocated properly so that it will reach the intended recipients and that misuse will be prevented? Give 10 government agencies which need prioritization and direct receipt of funds if ever PDAF is abolished. Rank them according to priority. Explain why you ranked accordingly. In no less than 5 sentences for each government agency, how and for what purpose will they be using the funds they directly receive. Once they receive the funds and use them appropriately, describe its contribution in improving the...
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...Market and Nonmarket Environments Market environment includes those interactions (which involve voluntary economic transactions and the exchange of property) between firms, suppliers and customers that are governed by Markets and Contracts. Nonmarket environment is composed of the social, political and legal arrangements that structure interactions (between the firm and individuals, interest groups, govt. entities, and the public which are intermediated not by markets but by public and private institutions) outside of, but in conjunction with, markets and contracts. Public institutions differ from markets because of characteristics such as majority rule, due process, broad enfranchisement, collective action, and publicness. Activities in the non market environment are Voluntary when, firm cooperates with govt. officials or an environment group and are Involuntary in the case of, govt. regulation or a boycott of a firm’s product led by an activist group. Nonmarket issues high on firms agenda include : 1. Environmental Protection 2. Health & Safety 3. Regulation & Deregulation, 4. Intellectual Property Protection 5. Human Rights 6. International Trade Policy 7. Regulation & Anti-trust 8. Activist Pressures 9. Media Coverage of Business 10. Corporate Social Responsibility & 11. Ethics Management & Managers is both responsible for formulating and implementing nonmarket as well as market strategies. Market Environment...
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...Work is no longer a domestic relationship and we also saw that master as employer have great control their servant/employees in their work performance. Control becomes an important key to determine if a person is an employee as of today or to show if there is an employment relationship. There are differences between employees and independent contractors, an independent contractor is a person who agrees to deliver a certain outcome whereas an employee, who must obey instructions from his or her employer in the discharge of his duties, so independent contractor act independently from the principal that hires him.The independent contractor can delegate others to complete the job as the principal is not concerned with how the contractor does it, so long the outcome is achieved. Using control test from the common law, we can determine that Amanda is an employee of the company as the company control her working hours. We are concerned with the nature of the control and the degree of the control – Federal Commissioner of Taxation V J Walter Thompson (Aust) Pty Ltd (1994) Case. In Walter Thompson case, the company hired artists to perform radio plays for advertisements. The High court of Australia found that the producer controlled the actors during rehearsals and performance and held that there is an employment relationship here. Thus , we can use this case to prove that Amanda is an employee of the company. We can use the multi factor test to determine whether Amanda is the...
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...When thinking critically about Benjamin Franklin’s view on the poor laws, it became apparent that his views were connected to the views of a conservative. Benjamin Franklin believed that “the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it” (Williams, H.,1994). Analyzing Benjamin’s meaning behind this statement is thought provoking; from a conservative point of view this statement can be perceived as individuals needing to take care of them selfs without any help from social services or government agencies. Benjamin Franklin believed that all individuals should be solely responsible for themselves and their economic welfare even if they were to become disabled or elderly, the belief was that they should have prepared for the unknown (Williams, H., 1994). Franklin took the stance that the poor laws made individuals dependent on others to provide for them, which then would lead to increased poverty and reliance on government supports. Franklin argued that the less you provide for individuals forces the individual to do for themselves, promoting independence, self worth and riches. Although Franklin believed that getting assistance form private charities could be harmful; he also believed that if the government was able to delegate how the programs were managed then this would prove to be 1 more effective (Williams, H., g82). The view that the government would be able to police the programs to ensure that individuals...
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...Commonalities and Successes Jacqueline Friederich BSHS/425 April 6, 2015 Joanie Blamer Commonalities and Successes Human service organizations are unique from organizations in the general business world. In this paper will explicate the essential focal point of all human service programs. It will as well identify the trends of human services, and identifying qualities of human service agency's associate with and how the office contributes to success. Central Focus of Human Service Programs Human service agencies work together, sharing the same goal in each program to enhance the client’s well-being (Lewis & Packard, 2012). In order to assist clients to improve their lives as human service professionals work together in different program settings. The common denominators are essential in the delivery of services. In order to enhance the client’s lives, each organization provides specific services but maintain the same goal. According to Harvey (1998), “having a very clear sense of purpose, direction, mission, or vision and a focus on its accomplishments is necessary to achieve excellence in Human Service Organization.” The human service mission is the needs of the client’s first and the commitment to improving the quality of life with the client and those in the community. Trends In Human Services Throughout the years, trends have changed the service delivery on the specific time. The different factors that change the service deliveries are political...
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...State Agency Initiative Project Clinton Alford MGT/522 – Public Administration: Institutions and Processes August 11, 2014 Instructor Eddie Gordon State Agency Initiative Project The focus of this project will center on South Carolina Initiative called “Strengthening Families South Carolina.” In this project, the subject to discuss will be to recognize where this initiative began at the state level and how it was supported. Most important, the subject to discuss is how the initiative influences local government and communities and recognize how this initiative was implemented at the agency using the personnel structure. The subject to discuss in this project is also to deliberate if privatization is a better alternative to carry out this initiative. Finally, I will present an organizational chart of the South Carolina Department of Social Services that displays the relationship between the state government’s structure with the local government’s structure, along with each component’s function and how privatization influences both state and local structures. Identify where this initiative originated at the state level and how it was supported The South Carolina State Initiative “Strengthening Families South Carolina” is conducted by the Children’s Trust of South Carolina (SCDSS, 2012). Most important, this initiative is a foundation created by the Center for the Study of Social Policy over the last ten years to stop child neglect and abuse (SCDSS, 2012)...
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